The concept of cryptocurrency trading is the same as stock trading, where instead of stock, digital assets are traded; one crypto coin is traded for another in the hope that the coins bought will increase in value over time. The difference between a crypto exchange and a regular stock exchange is that a crypto exchange is a 24-hour market where crypto trades can be executed at any time.
How Does Crypto Trading Work?
Cryptocurrency trading comprises 2 acts-
- CFD trading that involves speculating crypto price movements
- Buying or selling the underlying crypto coins via a cryptocurrency exchange
CFDs are derivatives, and therefore, the traders can speculate the price movements of the underlying crypto coins even without taking ownership (purchasing the coins in general). They can buy or sell the crypto coins according to their speculations. The best part of CFD trading is that the traders can gain total exposure to the underlying cryptocurrency market by putting up a small deposit referred to as the ‘margin.’
In the second act, where cryptocurrencies are bought via an exchange, the trader needs to purchase the coins. This is a more detailed process where the traders need to create an account on the cryptocurrency exchange, put up the total value of the underlying assets to open a position and install a crypto wallet to hold the crypto coins until they are ready to be sold in the market.
How to Start Crypto Trading?
The following steps will help traders to start crypto trading effortlessly.
Find an Exchange
Finding a reliable exchange and registering on it is the very first step to start crypto trading. There are plenty of websites claiming to be the most trustworthy ones, but not all claims are valid. To find a reliable exchange check out its license, whether it is registered under any regulatory organization or go through client’s reviews. It will help choose the most suitable venue for executing the crypto trade.
Pick up a Reliable Cryptocurrency Wallet
After registering on a crypto exchange, the traders now require to pick up a reliable wallet to store their crypto coins until they are ready to be sold. There are various types of crypto wallets to choose from- desktop, mobile, hardware, and paper. However, most cryptocurrency websites nowadays allow users to download official wallets from the website’s direct link.
After the traders have registered on an exchange and installed a wallet, they are ready to start trading on the platform like the review of stormgain explains. But before investing money in any coin, it is essential to study the asset because cryptocurrencies are highly volatile, and therefore their prices can change abruptly. Keeping track of the crypto-related news by following major blogs and publications is the most accessible approach to understand the market.
How to Earn With Crypto Trading?
Ways to earn money by trading cryptocurrencies:
- Buy and Hold Strategies- it is the most common crypto trading strategy wherein crypto coins are bought when the prices are low, and then they are held until the prices appreciate.
- Earning Dividends- some cryptocurrencies pay out dividends for simply buying and holding them.
- Day Trading is the most effective way to earn high returns from crypto trading, but it also requires investors to have good analytical skills to understand the crypto market.
- Crypto microtasks – some crypto websites pay small crypto rewards for accomplishing certain websites like viewing advertisements, application testing, doing surveys, etc.
Unlike traditional fiat exchanges, cryptocurrency trading requires traders to know how the entire ecosystem works. To succeed in cryptocurrency trading, traders need to find trustworthy sources for updated information concerning the cryptocurrency market. They also should choose a reliable exchange and crypto wallet along with reliable portfolio management tools.